Klarna’s Buy Now, Pay Later option under pressure from regulators
Klarna, the company behind the Buy Now, Pay Later feature is now planning severe changes ahead of an expected Treasury crackdown on the UK market.
If you are not familiar with Klarna, they are one of the leading payment methods in the UK due to the option to pay for your goods at a later date and return unwanted goods. To give an idea, the Buy now, pay later services were used by some five million people in the UK just last year.
Klarna allows consumers to pay for goods in instalments and, in some cases, even defer the payment for up to 30 days. It is particularly attractive to younger shoppers because they can buy something, try, and return if it is not of their liking, thus changing how shopping online is done.
However, at the same time, Klarna is a handy payment method for millions of users; it is also raising concerns about the lax affordability checks and the fact it was being used to gamble, increasing the risk of already problematic players.
After rumours spread via Twitter regarding the relationship between Klarna and UK gambling sites, Klarna’s boss came out in public to reassure that the company is committed to protecting its users and vehemently denied the rumours.
‘We’d like to reassure everyone and to make it very clear that consumers cannot use Klarna Buy Now Pay Later or credit products on betting or any gambling sites. As a matter of fact, in the UK, it is illegal to offer credit, including Buy Now Pay Later options, for gambling, said Klarna’s boss, Sebastian Siemiatkowski.
Despite the announcement, UK regulators and the FCA are still putting pressure on Klarna to address its shortcomings and increase its efforts to protect users from uncontrolled debts.
Chris Woolard, a Financial Conduct Authority (FCA) officer heading the review recommending regulation, said that although Buy Now, Pay Later was convenient for some, for others, it was “a really easy way to fall into problem debt”.
Players from the UK can still use Klarna to shop for clothes and other goods but not to deposit at your online casino, but this is not the end of the world. There are still many options for players that are safe, fast and widely accepted. Check our payment methods page here to know more.